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Gold Hits $1500 oz

Aug, 2019


Gold broke above $1,500 this week, and as I write, it’s holding near that level. Gold bugs around the world are celebrating. But what are the best ways to make money on what comes next? That’s what an independent speculator wants to know.

First, it’s important to understand that the number itself is not that important. For companies that produce gold, $1,499 is much the same as $1,500. It’s the magnitude of the increase that matters; companies that were making $100 an ounce at $1,400 make twice as much at $1,500.

But what matters most for what happens next—and how to play it—is how we got to $1,500. 

The first is the weakening outlook for the US dollar, which is generally bullish for commodities priced in USD. This is why we saw gold moving up as it became evident that the Fed was going to cut rates. The July 31 cut of 0.25% was just a starter, in my view. The Fed can say everything is fine and call it insurance, but I don’t believe it. Neither does the bond market, as shown by the inverted yield curve—which has predicted every US recession in the last 50 years. There are other danger signs flashing red as well, and the Fed has shown repeatedly since 2008 that it will throw the USD under the bus to try to keep the economic party going.

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